Litigation is bloodless war played by
rules--expensive, exhausting, and
generally out of control. It should be avoided whenever
possible.
However, there are several things that you can do to reduce the expense
of unavoidable litigation. Based upon my experience, I believe
that
the following techniques can richly repay the time that you take to
learn
and apply them.

A. Consider Using Customized Arbitration Clauses.

A contractual arbitration clause is one of the most powerful ways
that
a business has to try to control its exposure to costly and dangerous
lawsuits.
Arbitration, mediation, and other methods of resolving conflicts
outside
of court are sometimes collectively referred to as alternative dispute
resolution, or "ADR."

By the careful use of an arbitration or other ADR clause in its
contracts,
a business can dramatically affect how disputes with its employees,
customers,
vendors, and others with whom it does business are resolved, discourage
claims from being brought, and limit its exposure to large damage
awards.
On the other hand, an arbitration clause that is carelessly drafted or
slanted in favor of the other party to an agreement can be a serious
disadvantage
in the event of a dispute.

When parties agree to arbitration, they make a binding determination
that some or all of their disputes will be resolved outside of court by
one or more persons called arbitrators, rather than in court by a judge
or jury. In recent years, courts have allowed the contracting parties
broad
discretion to make up any rules they wish concerning who will hear the
dispute and what rules will govern the outcome.

Arbitration clauses can specify simplified procedures both before
and
trial. For example, they can limit or eliminate the depositions,
interrogatories,
document requests, and pretrial motions that are responsible for much
of
the sometimes crushing expense of litigation. The procedures at the
arbitration
hearing, which takes the place of a trial in court, can be simpler and
less time consuming than those for a jury trial. Arbitration clauses
can
also set short mandatory schedules for resolution of a problem before
both
the problem and the business involved in it become ancient history.

In addition to reducing litigation expenses and speeding the
resolution
of disputes, arbitration clauses can discourage or prevent claims from
being made in the first place. For example, a contract can provide that
claims that are not brought by certain deadlines are barred altogether.
Such provisions, which create shortened statutes of limitations for the
parties, will be enforced by the courts if they are found to be
reasonable.
Other provisions can require that, before making a demand for
arbitration,
the claimant must first try in good faith to negotiate a resolution
either
with or without the help of a trained mediator.

Provisions that require the party demanding the arbitration to
advance
the arbitrator's fees, which can be substantial, can deter groundless
claims.
So can provisions requiring the loser to pay the winner's attorneys'
fees.

Arbitration clauses, and other contract clauses, can limit the type
of damages or other relief that may be sought by a claimant. For
example,
the courts often uphold agreements that prevent the parties from
seeking
punitive damages, specific performance, or injunctive relief. A
contract
can also attempt to limit any award to actual economic out of pocket
damages,
thereby reducing or preventing exposure to claims for lost profits,
pain
and suffering, mental distress, and consequential or special damages.
These
kinds of limitations on damages not only reduce the amount of potential
awards, they discourage potential claimants, and their lawyers, from
making
claims in the first place.

There are limits to what you can put in an arbitration clause and
have it enforced, and those limits may depend on the type of
contract. For example, in California and some other
jurisdictions, predispute provisions for arbitration of disputes with
employees have some limitations in scope and are more strictly
scrutinized than other agreements to arbitrate.

There are a wide variety of organizations and individuals that, for
a fee, administer arbitrations. Some of them, like the American
Arbitration
Association, have procedural rules for dealing with issues that may not
be covered in the contract.

Arbitration provisions can incorporate these rules into a contract,
and vary any of them that the parties wish. If no rules are specified
in
the contract, California law supplies rules that will apply by default.

Because of the power and flexibility of arbitration clauses, failing
to include one in a contract or choosing one poorly can actually
determine
whether a business will survive a major dispute. As a result, no
business
should ever sign a contract or enter into a significant transaction or
relationship without first considering what kind of arbitration clause
or agreement could reduce its exposure in the event of a later lawsuit.

B. The Three Most Common Litigation Boondoggles and How to Avoid
Them.

If you are trying to control the cost of litigation, it is helpful
to
distinguish between strategies for reduction of costs and boondoggles.
Strategies
involve choices requiring thought and the weighing of risks against
savings.
Therefore, after considering them, you may decide that the a particular
economy is not worth the increased risk. Boondoggles are work
that
usually has insignificant value compared to the expense. You always
want to avoid them.

The three most common litigation boondoggles are wasteful staffing
practices,
the digesting of deposition transcripts, and the failure to attempt to
settle.

1. Wasteful Staffing.

Wasteful staffing practices consist of excessive staffing, changes
in
staffing, and excessive delegation to junior lawyers. If you have more
than one lawyer and one paralegal regularly working on your case, and
the
litigation is unlikely to result in a judgment of more than a half a
million
dollars, you should ask your lawyer about staffing.

2. Digesting Transcripts of Depositions.

The routine digesting transcripts of depositions is one of those
fine
old traditions that law firms have been practicing for ages and that,
as
far as I can tell, produce only useless paper and increased billings
for
paralegals and junior lawyers. I have never, I repeat, never,
found
a deposition digest to be at all helpful in a case. Now that you can
get
your depositions on a computer disk and do instant text searches on
them,
I believe that any law firm that is charging you for routine digesting
of deposition
transcripts
is, at best, clueless.

3. Failure to Attempt Settlement.

The most effective way to control litigation costs is to settle
early.
Sometimes this is not possible. However, it should be attempted in
every
case.

Your lawyer may be reluctant to get the ball rolling on settlement
because
he thinks it make him look like a wimp, so unless you have an unusually
secure lawyer, it may be up to you to raise the subject. This does not
mean that you should appear weak to your opponents. The idea is to talk
softly, but keep whacking the bad guys with a big stick until they come
to the table.

C. How to Help Your Lawyer Reduce His Fees.

1. Have a Strategy.

You can't control your fees if you don't have a strategy. Flailing
around
at a couple of hundred dollars per hour gets expensive fast.

2. Talk to Your Lawyer.

Ask your lawyer about his overall strategy for the case. What
kinds
of motions does he think may be cost effective? What does he think
about
the prospects of an early settlement? How are you going to try to win
the
case? Is a demurrer worth the money? Is it realistic to try to win on
summary
judgment?

Make sure you talk to your lawyer early about settlement. You
should
do this even where early settlement is not likely. Many lawyers don't
like
to bring this up.

Discuss each the costs and benefits associated with motion or
other
significant action in the case. Get estimates for specific activities
that
are under consideration. No lawyer can reliably estimate the cost of an
entire lawsuit, but he should be able to do a reasonable estimate for a
particular motion. Ask what benefit can reasonably be expected from the
motion or other tactic being considered. Ask what alternatives exist
for
that tactic and what they would cost.

3. Determine What the Case is Worth.

Estimate both trial value and settlement value. Settlement value
is
much higher than trial value because of the staggering costs of
litigation.
At best, such an evaluation is a guess, but must be done in order to
make
rational decisions about strategy.

If you are a plaintiff, ask yourself

a. How much can you realistically expect to recover if you win?

b. What are your chances of winning?

c. How likely is it that you will be able to collect any
judgment?

d. How much is the case likely to cost?

For example, if the most likely recovery if you win is $400,000, your
chances
of winning are 50%, your chances of collecting judgment are 100% (often
they are far less than that), and the cost of the litigation
(including
any appeal and collection procedures!) is $200,000, the trial value of
the case is NOTHING! On the other hand, the settlement value of the
same
case would be $200,000.

If you are a defendant, you should make same kind of calculation.
The
results will be equally sobering, I assure you.

The following options each involve some risk, and are not
appropriate
in every case. But you should consider them with your lawyer in each
case.

a. Written Statements.

Consider the use of written statements instead of depositions
for healthy
and friendly witnesses who you are sure will be available to testify at
trial.

b. Answer Instead of Demurring.

Consider filing an answer rather than a demurrer even to a
legally insufficient
complaint.

c. Preliminary Relief.

Don't seek preliminary relief, like a preliminary injunction,
unless
you need it, you have a good chance to get it, and it will be worth the
money.

d. Motions to Compel Discovery.

When considering whether to make motions to compel discovery,
don't
just ask whether you are entitled to the information--ask whether it is
worth the cost of obtaining it.

e. Simplify Your Complaint.

Consider whether you can sometimes make a lawsuit that you file
less
expensive by simplifying it.

(1) Forego Unnecessary Parties.

You should consider not suing parties against whom you only
have a slim
chance of prevailing and peripheral parties who have no money.

(2) Dispense With Exotic Claims.

Anyone who has gone to law school can spin a virtually
unlimited number
of exotic theories involving an unlimited number of defendants.
Consider
dispensing with theories that do not add anything significant to the
case.

(3) Avoid Factually Complicated Claims.

Sometimes you have a strong claim that can probably be decided
in summary
judgment and a weak claim that will require a long and expensive trial.
When this happens, consider not bringing the factually complicated
claim.

5. Your Invoice Is Your Friend.

Your invoice is one of your best tools for reducing your costs.
You
should always read it, and ask questions if you have them. If the
invoice
is not detailed enough for you to understand what you're paying for,
ask
for more detail.

6. Don't Let, or Make, Your Lawyer Do the Grunt Work.

You can save a lot of money if you will do as much of the
necessary
but routine tasks involved in litigation yourself. For example, it will
cost you a lot less to pay your own clerical personnel to locate and
organize
your own documents than to pay your lawyer to drag them out of you and
then sort through them.

Other things you can do to help keep the costs down are to prepare
a
written chronology summarizing the relevant facts and evidence in the
case,
help with the investigation by locating witnesses and obtaining
necessary
documents in the hands of cooperative third parties, crunch your own
numbers,
prepare any necessary financial schedules and exhibits.

7. Avoid the Attitude Traps.

Certain statements that are often heard in law offices are often
the
prelude to an sad lesson in the high cost of litigation. If you are
tempted
to say any of the following to your lawyer, watch out!

"Can you just take a quick look at this?" Ask yourself, is it
possible
to sort out the relevant facts in the time that you are allowing?

"I want a "junk-yard dog" litigator. Remember that over 90% of
all
disputes are settled before trial. If you hire a mad dog, you will
probably
get bitten. You don't want mindless aggression. You want rational
aggression.

"It's the principle of the thing." Usually, after the first
$30,000
or so, the principle seems to get less important than the principal.

"Money is no object." This is almost never true. The only question
is
usually, "How much is it worth?"

"I'd rather pay you than him." This usually indicates that you
have
an irrational certainty about your chances of winning. Realize
that,
even in what may seem to be the strongest case, you may end up paying
both.

D. Conclusion.

No matter what you do, being a litigant is never going to be much
more
fun than root canal, much cheaper than a yacht, or much more
reassuring
than heavy air turbulence. However, those who fail to follow the
advice above are likely to find that it is even more expensive than
it needs to be.

DISCLAIMER: I have entered
government service and, as of September 1, 2008, am no longer engaged
in the private practice of law. Therefore, this site is no longer
being maintained, may not be accurate, and should not be relied
upon. It is not now and was not ever intended as legal
advice. It is being provided for historical purposes, and for the
benefit of those lawyers who are capable of independently verifying the
information and judging the opinions in it, and then reaching their own
conclusions. You are strongly advised to consult qualified legal
counsel
before adopting any of the ideas or suggestions in this material, which
may or may not be applicable in your jurisdiction or to your specific
situation, and may no longer be accurate or prudent in any case.
The opinions and statements at this site were solely my own. They
were not and are not those of, nor were they nor are they made on
behalf of, any agency of government or anyone else.